UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
------------- -------------
Commission file number 0-9541
-------
BALCOR EQUITY PROPERTIES LTD.-VIII
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3011615
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Rd.
Bannockburn, IL 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
-----------------------------
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
- -----------------------------------------------------------------------
Results of Operations
- ---------------------
Operations
- ----------
Summary of Operations
- ---------------------
Balcor Equity Properties Ltd. - VIII ("the Partnership") sold the Greentree
Village Apartments in August 1996 and recognized a gain on sale of this
property. As a result of this gain, the Partnership generated higher net
income during the 1996 as compared to 1995. During 1994, the Partnership
received a repayment of its interest in the Sherwood Lake Apartments
wrap-around note receivable and recognized the previously deferred gain,
causing net income to decrease during 1995 as compared to 1994. Further
discussion of the Partnership's operations is summarized below.
1996 Compared to 1995
- ---------------------
In August 1996, the Partnership sold the Greentree Village Apartments. Also,
during the first three quarters of 1996, average occupancy levels decreased at
the Partnership's remaining properties due to a stagnant market in San Antonio
during 1996. The combined effect resulted in a decrease in rental and service
income during 1996 when compared to 1995. Occupancy levels have increased
during the fourth quarter of 1996 due to increased marketing efforts at the
properties. All of the remaining properties are located in the San Antonio,
Texas market. The properties are experiencing increased competition from new
construction of single and multifamily housing. The phase out of the corporate
suite rental program at Cedar Creek Apartments - Phases I and II also
contributed to the decrease in rental and service income.
Interest income on short-term investments decreased during 1996 when compared
to 1995 due to lower average cash balances resulting from a special
distribution made to the Limited Partners in October 1995 primarily from the
Sherwood Lakes note receivable repayment.
As a result of the Greentree Village Apartments sale, depreciation and property
management fees decreased during 1996 as compared to 1995.
As a result of increased expenditures of approximately $266,000 for payroll,
painting and decorating, and carpet replacement at Cedar Creek Apartments -
Phase I and II, property operating expense increased during 1996 when compared
to 1995. This increase was partially offset by a decrease of approximately
$223,000 resulting from the sale of Greentree Village Apartments.
Real estate tax expense decreased during 1996 when compared to 1995 primarily
due to the sale of Greentree Village Apartments as discussed above. Also
contributing to the decrease was a reduction in the assessed values of the
Partnership's remaining properties, all of which are located in the San
Antonio, Texas market.
<PAGE>
The Partnership incurred nonrecurring legal, consulting, printing and postage
costs in connection with two tender offers during 1995, and one tender offer
during 1996. As a result, administrative expenses decreased during 1996 as
compared to 1995.
The Partnership sold the Greentree Village Apartments in August 1996 and
recognized a gain on sale of $6,122,000.
As a result of the Greentree Village Apartments sale, the Partnership
recognized debt extinguishment expense of $102,943 related to the remaining
unamortized deferred expenses.
1995 Compared to 1994
- ---------------------
Due to higher average cash balances, primarily from the Sherwood Lakes
Apartments wrap-around note receivable repayment received in November 1994, and
higher interest rates earned on short-term investments during 1995, interest
income on short-term investments increased during 1995 as compared to 1994.
Interest income on wrap-around note receivable was earned in 1994 on the
Sherwood Lakes wrap-around note receivable.
The outstanding short-term loans from the General Partner were repaid during
1994. Prior to this repayment, the Partnership recognized interest expense on
short-term loans.
The Partnership incurred nonrecurring legal, consulting, printing and postage
costs in connection with two tender offers during 1995. As a result,
administrative expenses increased during 1995 as compared to 1994.
During November 1994, the Partnership's interest in Sherwood Lakes Apartments
wrap-around note receivable was repaid. As a result of this repayment, the
Partnership recognized the previously deferred gain on the sale of the
property.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $1,046,000 as
of December 31, 1996, when compared to December 31, 1995, primarily as a result
of the net proceeds received from the sale of Greentree Village Apartments in
August 1996. Cash flow of approximately $97,000 was provided by operating
activities consisting of cash flow from the operations of the Partnership's
properties and interest income on short-term investments, which were partially
offset by the payment of administrative expenses. Cash provided by investing
activities of approximately $8,559,000 consisted of proceeds from the sale of
Greentree Village Apartments, less selling costs. Cash used in financing
activities of approximately $7,610,000 consisted of a distribution to the
Limited Partners, the repayment of the mortgage note payable on Greentree
Village Apartments and principal payments on mortgage notes payable.
<PAGE>
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit, or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. A deficit is
considered significant if it exceeds $250,000 annually or 20% of the property's
rental and service income. The Partnership defines cash flow generated from its
properties as an amount equal to the property's revenue receipts less property
related expenditures, which include debt service payments. The Greentree
Village Apartments was sold in August 1996 and generated positive cash flow
during each of 1996 and 1995. The Walnut Hills Apartments - Phase II generated
positive cash flow during each of 1996 and 1995. The Walnut Hills Apartments -
Phase I generated a marginal cash flow deficit during each of 1996 and 1995;
however, the combined property operations of Walnut Hills Apartments - Phases I
and II generated positive cash flow during each of 1996 and 1995. The Cedar
Creek Apartments - Phases I and II generated marginal cash flow deficits during
1996 as compared to positive cash flow during 1995. The decrease is due to
decreased average occupancy and rental rates at these apartment complexes. The
San Antonio market has experienced an increase in construction of new single
and multifamily housing that has increased competition for tenants. As of
December 31, 1996, the occupancy rates of the Partnership's remaining
properties ranged from 96% to 98%.
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's properties, including improving operating
performance, and seeking rent increases where market conditions allow.
The Partnership's remaining properties are located in San Antonio, Texas. The
multi-housing market in San Antonio continues at a sluggish pace with occupancy
rates averaging 91% city wide. At December 31, 1996 occupancy at the
Partnership's remaining properties ranged from 96% to 98%. While San Antonio
continues to enjoy a relatively high job growth rate, this growth consists
largely of lower paying jobs in the service sector. As a result of the job
growth, approximately 6,000 new rental units have been added to the inventory
over the last three years and an additional 2,500 are anticipated in 1997. The
new construction in the San Antonio market could create an over supply
situation, which could have a negative impact on rental and occupancy rates.
In August 1996, the Partnership sold the Greentree Village Apartments in an all
cash sale for $8,800,000. From the proceeds of the sale, the Partnership paid
$3,073,129 to the third party mortgage holder in full satisfaction of the first
mortgage loan and paid $240,916 in selling costs. The Partnership distributed
the remaining proceeds to the Limited Partners in October 1996 after retaining
an appropriate amount of working capital as determined by the General Partner.
See Note 10 of Notes to Financial Statements for additional information.
The Partnership sold the Greentree Village Apartments in August 1996, and is
actively marketing the remaining properties in its portfolio. The timing of the
termination of the Partnership and final distribution of cash will depend upon
the nature and extent of liabilities and contingencies which exist or may
arise. Such contingencies may include legal and other fees stemming from
litigation involving the Partnership. In the absence of any contingency, the
reserves will be paid within twelve months of the last property being sold. In
the event a contingency exists, reserves may be held by the Partnership for a
longer period of time.
<PAGE>
Each of the Partnership's remaining properties is owned through the use of
third-party mortgage loan financing and, therefore, the Partnership is subject
to the financial obligations required by such loans. See Note 5 of Notes to
Financial Statements for information concerning outstanding balances, maturity
dates, interest rates, and terms related to each of these mortgage loans. As a
result of the General Partner's efforts to obtain refinancing of existing loans
with new lenders, the Partnership has no third-party financing which matures
prior to 2002.
The Partnership made distributions totaling $147.50 and $100.57 in 1996 and
1995, respectively. See Statement of Partner's Capital for additional
information. Distributions were comprised of $7.50 of Net Cash Receipts and
$140.00 of Net Cash Proceeds in 1996, and $40.83 of Net Cash Receipts and
$59.74 of Net Cash Proceeds in 1995. Distributions increased in 1996 as
compared to 1995 due to the sale of the Greentree Village Apartments. No
distributions were made in 1994. Regular quarterly distributions were suspended
in the first quarter of 1996 due to costs associated with the three unsolicited
tender offers to Limited Partners and the decrease in rental and service income
experienced at the San Antonio properties. To date, Limited Partners have
received cash distributions totaling $455.57 per $1,000 Interest. Of this
amount, $173.33 has been Net Cash Receipts and $282.24 represents Net Cash
Proceeds. Future distributions will depend on cash flow generated from the
Partnership's remaining properties and proceeds from future property sales, as
to all of which there can be no assurances. In light of results to date and
current market conditions, the General Partner does not anticipate that
investors will recover all of their original investment.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sale prices
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
Certain statements in this Form 10-K constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements may include projections of revenues, income or losses, capital
expenditures, plans for future operations, financing plans or requirements, and
plans relating to properties of the Partnership, as well as assumptions
relating to the foregoing.
The forward-looking statements made by the Partnership are subject to known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Partnership to differ materially
from any future results, performance or achievements expressed or implied by
the forward-looking statements.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of l934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BALCOR EQUITY PROPERTIES LTD.-VIII
By: /s/ Jayne A. Kosik
-----------------------------------
Jayne A. Kosik
Managing Director and Chief
Financial Officer (Principal
Accounting Officer) of BRI
Partners-79, the General Partner
Date: April 4, 1997
-----------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------------------- ------------------------------- -------------
President and Chief Executive
Officer (Principal Executive
Officer) of BRI Partners-79,
/s/ Thomas E. Meador the General Partner April 4, 1997
- --------------------- -------------
Thomas E. Meador
Managing Director, and Chief
Financial Officer (Principal
Accounting Officer) of BRI
/s/ Jayne A. Kosik Partners-79, the General Partner April 4, 1997
- --------------------- -------------
Jayne A. Kosik
<PAGE>
